Peco doesn't want to lose with deregulation. (Peco Energy Co.)

Peco Energy Co. doesn't mind if Pennsylvania makes new rules to allow competition in the electric industry. It simply doesn't want to lose the investments it made under the old rules.

In a veiled warning, the utility told the state to expect a vigorous court battle if, in lifting the protective mantle from its monopoly and creating a deregulated market, it prevents the company from recovering the investments made under the prior, regulated, system.

"If the government takes away the benefits of the regulatory compact by introducing competition, it is obliged to compensate utilities for all stranded investment created by government actions," the company's corporate secretary, Katherine Combs, said in recent testimony to the House Consumer Affairs Committee. "Otherwise, the utilities' property will have been taken without compensation as required under the Constitution."

Peco executives have been trying to prepare for deregulation, cutting the payroll and boosting …